An Empirical Study Of The Efficiency Of Different Intermediate Targets Of China’s Monetary Policy

Selection of intermediate targets for the Monetary Policy is one of the mostimportant issues in Monetary Theory. There are numerous arguments on the efficiencyof different intermediate targets, consequently, further studies should be made aboutthis issue.The first three chapters sees the observation of the efficiency of differentintermediate targets in China’s practice of Monetary Policy in regard to theirrelevance, measurability and controllability. Initially, an introduction is made totheories on the intermediate target selection of different economic schools, stressingupon Poole’s analysis. With the study of relevant practices in other countries, acomparative analysis is made to the circumstance in China. Chapter4describes theefficiency of different intermediate targets through quantitative and qualitativeanalysis.The empirical study is based upon Poole’s analysis, with an extension to themodel by shifting the ultimate target in adaptation to China’s practice of MonetaryPolicy. With comparison between the impacts upon the ultimate target of moneysupply and interest rate, it’s concluded that interest rate better serves as theintermediate target to inhibit the price volatility.